Overview
| Name | Newfoundland and Labrador Labour Market Outlook |
| Author | Economic and Project Analysis Division, Department of Finance for the Department of Advanced Education and Skills, Government of Newfoundland and Labrador |
| Contact | Manager of Modelling and Technical Analysis (Department of Finance) |
| Timing | 10-year forecast, updated yearly |
| Outputs | Datasets available on the Department of Finance website |
| Additional documentation | Methodology |
The Newfoundland and Labrador Labour Market Outlook estimates labour demand, supply and imbalances for 186 detailed occupational groups based on 3- and 4-digit National Occupation Classification (NOC) minor groups for the province.
Methodology
Projection of Labour Demand
For each of the 186 occupations and each year of the 10-year forecasting period, expansion demand (from employment growth) and replacement demand (from those leaving the workforce) are forecast and summed to produce the total labour demand (job openings).
Expansion Demand
Expansion demand is determined by the macroeconomic forecast produced using the Newfoundland and Labrador Econometric Model (NALEM) and an in-house input-output model. The models utilize forecast data from the Department of Finance (components of expenditure-based real and nominal GDP) and historical data from Statistics Canada, including the following:
- Gross domestic product, expenditure-based, provincial and territorial, annual (Table 36-10-0222-01)
- Labour productivity and related measures by business sector industry and by non-commercial activity consistent with the industry accounts (Table 36-10-0480-01)
- Industry Accounts Division detailed supply/use tables
- Custom Labour Force Survey (LFS) employment and tax filer by industry data purchased from Statistics Canada
The economic forecast is based on several assumptions regarding the Canadian, United States and world economies and the level of activity in the province’s key industries. The assumptions regarding provincial industries are based on inputs from and consultation with the appropriate provincial government departments. The macroeconomic forecast outputs the following:
- Real Gross Output (GO) for 56 groupings of 2-, 3- and 4-digit North American Industry Classification System (NAICS) categories (not public) (A).
To forecast employment by industry, the historical labour productivity is first estimated for each of the 56 industries by dividing the macroeconomic historic GO for each industry by employment for that industry. Data for the detailed historical employment by industry comes from a custom Labour Force Survey request to Statistics Canada. Next, the labour productivity estimates are forecast based on historical trends. Multiplying the forecast labour productivity rates by the forecast gross output, an estimate of employment for the 56 industries is obtained. A similar exercise is conducted using data on the number of employed tax filers by industry (Statistics Canada, custom request). The results are as follows:
- Employment by industry and number of tax filers employed by industry, by year (not public) (B).
Employment by industry must be converted into employment by occupation. This is done using a detailed occupation-industry ("share") matrix whose entries represent an occupation’s share of an industry’s employment. The share of employment for each of the 500 4-digit NOC occupations within each of the 56 industries is estimated (Census, custom request). Some adjustments are made to the shares of occupations with known totals in the province (e.g., nurses, teachers, etc.). The occupation/industry shares are then forecast to reflect observed trends and assumptions surrounding occupations in decline and those whose share is expected to increase. The results are as follows:
- Employment by occupation and number of tax filers employed by occupation, by year (not public) (C).
Replacement Demand
Replacement demand - the number of job openings in existing positions - is estimated for each occupation and year. Replacement demand is generated by two main types of departures: retirement and in-service mortality.
Death and retirement rates for each of the 186 occupations are calculated using those produced by the Canadian Occupational Projection System (COPS). COPS estimates rates for all occupations with a 3-digit NOC code for the entire country rather than by province. Replacement demand is forecast by applying the projected occupation-specific retirement and death rates to the projected occupation labour force. The labour force for an occupation - employed plus unemployed - is projected using the occupation’s normal unemployment rate (with labour force estimated as employment divided by one minus the unemployment rate). A normal unemployment rate is calculated by occupation based on historical data and is assumed to be constant over the forecasting period. The result is as follows:
- Level of replacement demand (or attrition) by occupation, by year (results available here) (D).
With expansion and replacement demand calculated, the number of job openings in each year for an occupation can be written as the sum of expansion/contraction demand - the difference in number of employed (C) in two consecutive years - and replacement demand (attrition) to obtain the following:
- Total job openings by occupations, by province, by year (E).
Projection of Labour Supply (or Job Seekers)
The demographic forecast determines the overall supply of labour. This forecast is based on two in-house models: 1) a population projection model that estimates population by single year of age (supported by historical data from Statistics Canada Tables 17-10-0005-01 and 17-10-0008-01); and 2) a participation rates model that estimates labour force participation rates by single year of age (supported by historical data from Statistics Canada Table 14-10-0018-01).
Two streams of new labour supply (or job seekers) are estimated: 1) new entrants - the number of people between 15 and 34 who enter the labour force for the first time; and 2) migration - both international immigration and net interprovincial migration. Finally, the occupational mobility of, for example, people changing jobs or people re-entering the job market, is calculated as the residual between labour force demand - expansion demand plus replacement demand - and the available new supply of labour from new entrants and migrants.
Supply from New Entrants
New entrants are assumed to enter the labour force between the ages of 15 and 34 and are calculated as the population (POP) at each age minus deaths multiplied by the difference in participation rates (PR) from each age to the next. For year, the number of new entrants is calculated as follows:
where ages a=15,20,25,30 represents five-year age groups 15-19, 20-24, 25-29 and 30-34.
The total number of new entrants is then distributed by occupation based on each occupation’s share of total employment. Since managerial and supervisor occupations require experience, it is assumed that their share of new entrants is zero. The result is as follows:
- New entrants by occupation, by year (not public) (F).
Supply from Migration
Net migration by single year of age is calculated as the difference in population from one year to the next minus deaths. Participation rates by single year of age are applied to this calculation of net migration to estimate the labour force due to migration:
- Number of migrants seeking jobs by single year of age (not public) (G).
After new entrants are counted, migrants are then allocated to occupations based on the labour demand by occupation. This means that new entrants are distributed first to the occupations and migration helps fill the gap in the labour supply. It is assumed that the gap between the supply of labour and the labour force demand will affect the unemployment rate. A positive gap (labour supply "shortage") should decrease unemployment; a negative gap (labour supply "surplus") should increase unemployment. The gap is used to adjust the unemployment rate and an adjusted labour force is calculated based on the fluctuations in the unemployment rate resulting from supply/demand imbalances. Finally, the net migration is allocated to each occupation based on that occupation’s share of the gap between the adjusted labour force (based on fluctuating unemployment rates) and the normal supply of labour (based on a constant unemployment rate over the forecast period):
- Number of migrants seeking jobs by occupation, by year (results available here) (H).
Supply from Occupational Mobility
The model assumes that labour force demand at time t is always met by the supply at time t; whatever gap may exist initially is filled by new entrants, net migration and occupational mobility. For each occupation, with net expansion demand (C), replacement demand (D), supply from new entrants (F) and supply from net migration (H) already estimated, occupational mobility (OM) can be calculated with the following equation:
The left side represents job openings and the right side represents job seekers.
Identification of Imbalances
Analysis is carried out on the 186 occupations, considering both supply and demand, to identify each occupation’s job prospects over the forecasting period, expressed as a rating from 1 to 4 (1 = an excess supply of labour; 4 = an excess demand for labour). Comparing the historical and projected growth rates is a good indicator of how difficult it will be to meet the demand. This analysis includes considerations surrounding employment growth rates; attrition (deaths and retirements as a percentage of labour force); new entrants (as a percentage of labour force); participation rates (which determine labour supply); age of the workforce (which impacts death and retirement rates); unemployment; other mobility; and migration. Other mobility and migration as a percentage of labour force will also indicate how difficult it will be to meet remaining employment demand after new entrants are allocated to occupations. The result is as follows:
- Ratings by occupation, by year (results available here).
Applications
The Newfoundland and Labrador Labour Market Outlook results are distributed and used in many ways.
Individual Canadians
Immigration Policies and Programs
Immigration staff use the results to review future demands for select occupations when dealing with both employers and clients.
Education
Post-secondary institutions use the results for program planning.